About Us
Global Law Experts Logo
Global Law Experts Logo

Find a Global Law Expert

Practice Area


Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.

Advice on Doing Business with Foreign Companies

posted 2 years ago

As more and more companies going abroad to do business or make a cross-border deal, control of international legal risks are becoming increasingly important. As a lawyer, I have to say that indeed there are a few international dealers cheated or scammed due to lack of risk awareness, even though most of international businesses would be a good experience. This article is intended especially for those companies:

  • Who would do business internationally for the first time, lacking the knowledge or skill of risk control
  • Who are going abroad to invest, without a thorough investigation of local laws and/or practice
  • Who import or export goods cross-border from or to China
  • Who co-operate with a foreign company to do business relating to China
  1. Background check.

Be careful to check the company’s background especially when you go to do an international business for the first time.

Nowadays, many companies take advantage of the website to look for information about their client, and also may rely on the email and instant messenger to communicate with their foreign clients online. Parties may have never met with each other before the deal. Most of time, they’re fortunate and everything goes well with their foreign clients, however indeed, there are a few cases in which that people fall into ditch at the first deal or at some phrase. Any deceit or even misunderstandings may be enough to cost all his profit that has made over the years.

One such case I’d ever met is that an foreign company was scammed and caused a big loss. That foreign company had been doing business many years and many times online, without much problem. On June 2017, this company found, on the website “made-in-China”, that there is a sales company selling chemical materials that they desired with a very cheap price, and then the company contacted the salesman. They negotiated online by email and whatsapp, and reached an agreement. In the late August of 2017, the foreign company made an advance payment, but in the early September when they wanted to press the Seller to deliver the goods to them, they found they couldn’t reach the seller, because the seller or we can call them “the scammer” cut off their communication with the buyer, to this point the foreign buyer came to realize that they may be scammed or deceived. Then they start looking for a lawyer to take care of their case. In the end, the buyer trusted the lawyer Jingzhan Wang from Tianjin Bozhuan Law Firm to help to take legal actions against the scammer. Spending a long time, finally, the buyer finally was able to recover most of loss/damage, however he also cost additional time and attorney fees. 

As revealed above, the first thing to control international risks is to choose a creditable company, actually it’s similar to domestic business. The difference is that it’s much harder to remedy when doing business with a company abroad. If you do business with an uncreditable company, you may put yourself in risk even though you may have made a perfect text of the contract The reason I think is as follows :

Usually you may two options when a dispute occurs between you and the counterparty: one is to negotiate with the counterparty and try to reach a complementary agreement or a completely new agreement or cancel the agreement; however, when failure of negotiation, you may have to take the other option that is to seek for a legal remedy. When you are doing business which a company that is uncreditable, the most chance is it’s not easy to resolve it just by negotiation because the company or its head doesn’t mind their reputation and even may don’t intend to fulfil a contract at the beginning. Therefore sometimes you’ll have to hire a lawyer to make a legal remedy. After spending a considerable attorney fees and/or other costs, you may be satisfied with the adjudication, whether by arbitration or court, but don’t be happy with it too early, that doesn’t means that you will recover your loss definitely. Some small companies or uncreditable companies or those with bad history of performance, may don’t care much about their reputation and/or are lack of correspondent capital and capacity to take the liabilities. Then they may refuse to respect the award and you may have to apply to court for an enforcement. Legally, the court should notice the defendant to fulfil its obligations, and order them if he doesn’t do it accordingly. However, in practice in China and perhaps most of the other countries, it’s not easy to be paid if there isn’t any property existing to be able to be executed.

So, it’s very important to have a background check to the company you’re going to deal with, what you should do is:

  1. Hire a lawyer to make an analysis of the legal risk
  2. To login a governmental website to check their license
  3. Visit the site in person if possible
  4. Check the registered capital, if it’s a company in China. Nowadays a registered capital doesn’t essentially reflect his capacity to supply or pay, but in somewhat degree it can tell you the degree of the counterparty.
  5. Check the history record of the company. If there are already lots of existing lawsuits and/or they’re even under compulsory execution by the court or other authorities, it indicates that the company may operate its business without a strict compliance with laws. So you need to be careful with such company.

To be clearer to address the above, let’s take an example: suppose that an American trade company resident in California is going to do business with a business with a machine production company based on Tianjin, China.  The first thing to do to learn about the Tianjin-based company is to hire a reputable law firm like Tianjin Bozhuan Law Firm, or lawyer to look into the background of the company. The lawyer, upon trusted by the American company, may check the registration status of the company, to find if there is any lawsuit in the history of the company or not, and visit the company if requested, and etc.  The lawyer could then assess the company’s creditability and send his legal advice to the US-based company. The company will be in a better position to decide if they follow the law firm’s legal suggestions or not. Thus, taking the legal risk into consideration when making a deal and avoid some potential risk as much as possible.

Find the right Legal Expert for your business

The premier guide to leading legal professionals throughout the world

Practice Area
0 m+


who are already getting the benefits

Sign up for the latest legal briefings and news within Global Law Experts’ community, as well as a whole host of features, editorial and conference updates direct to your email inbox.

Naturally you can unsubscribe at any time.

Newsletter Sign Up

About Us

Global Law Experts is dedicated to providing exceptional legal services to clients around the world. With a vast network of highly skilled and experienced lawyers, we are committed to delivering innovative and tailored solutions to meet the diverse needs of our clients in various jurisdictions.

Contact Us

Stay Informed

Join Mailing List